2024 is turning out to be a banner year for the U.S. stock market. All three major indices touched a series of record highs. The S&P 500 made 50 new all-time highs and is on track for one of the best years in the millennium. With just a week left before year-end, the benchmark moved up 23% this year. The Dow Jones has risen 12.3% and the tech-heavy Nasdaq Composite Index has outperformed with gains of 29% this year.
The adoption of artificial intelligence (AI), the rate cut wave and hopes of growth under President-elect Trump's administration led to the astounding market surge.
The winners are broad-based across sectors, building up massive gains this year. We have presented a bunch of top-performing ETFs from various corners of the market that have built up massive gains in 2024. These are First Trust SkyBridge Crypto Industry & Digital Economy ETF CRPT, Roundhill Magnificent Seven ETF MAGS, American Century Focused Dynamic Growth ETF FDG, VanEck Vectors Video Gaming and eSports ETF ESPO and SoFi Social 50 ETF SFYF.
Behind the Solid Performance
The Fed slashed interest rates three times over the past three months, bringing down the benchmark rate to 4.25-4.50%. Lower interest rates generally lead to reduced borrowing costs that help businesses expand their operations more easily and increase profitability. This, in turn, stimulates economic growth and boosts the stock market. However, the central bank delivered a less dovish view for 2025. The Fed envisions only two rate cuts in 2025, in contrast to four projections in September, given the solid labor market and the recent stall in lowering inflation (read: Wall Street Dives on Less Dovish Fed: 5 ETF Zones That Win).
Wall Street remains optimistic about the incoming administration’s economic agenda. Though President-elect Trump’s policies on restricting illegal immigration, enacting new tariffs, lowering taxes and reducing regulations will accelerate inflation, they will likely boost the economy. The anticipation of greater tariff barriers and a step to move manufacturing back home is expected to drive stocks.
The AI boom will continue to fuel a rally in the stock market. The expansion of AI applications holds the promise of ushering in fresh growth opportunities in the tech sector and beyond. The generative AI market is poised to explode, seeing a CAGR of 42% to $1.3 trillion over the next 10 years from a market size of just $40 billion in 2022, according to a new report by Bloomberg Intelligence.
However, geopolitical tensions and Fed rate uncertainty weighed the stocks.
ETFs in Focus
First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT) – Up 101.7%
First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economy-related innovation. SkyBridge identifies securities primarily via “bottom-up” research focused on finding companies leading in the crypto industry ecosystem. First Trust SkyBridge Crypto Industry & Digital Economy ETF holds 31 stocks in its basket and charges 85 bps in fees per year from investors. It has amassed $113.7 million in its asset base and trades in an average daily volume of 89,000 shares.
Roundhill Magnificent Seven ETF (MAGS) – Up 66.4%
Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $1.6 billion in its asset base and charges 29 bps in fees per year. MAGS trades in an average daily volume of 1.1 million shares (read: Mag 7 ETFs Look Unstoppable Heading Into 2025).
American Century Focused Dynamic Growth ETF (FDG) – 48.1%
American Century Focused Dynamic Growth ETF is a high-conviction, large-cap growth portfolio that seeks to deliver strong results over time through investment companies with opportunities to sustain their above-average growth. It holds 39 stocks in its basket, with key holdings in information technology, consumer discretionary, communication services and health care. American Century Focused Dynamic Growth ETF has amassed $289.4 million in its asset base and charges 45 bps in annual fees. It trades in an average daily volume of 21,000 shares (read: Growth ETFs Win in 2024: What's in Store for 2025?).
VanEck Vectors Video Gaming and eSports ETF (ESPO) – Up 46.1%
VanEck Video Gaming and eSports ETF offers exposure to global companies involved in video game development, e-sports, and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. It holds 28 stocks in its basket. VanEck Video Gaming and eSports ETF is tilted toward American firms, which account for 46.1% of the portfolio, whereas Japan and China round off the next two, with a double-digit allocation each. VanEck Video Gaming and eSports ETF has gathered $288.1 million in its asset base and trades in an average daily volume of 16,000 shares. ESPO charges 56 bps in annual fees from investors.
SoFi Social 50 ETF (SFYF) – Up 46%
SoFi Social 50 ETF follows the SoFi Social 50 Index and is composed of the top 50 most widely held U.S. listed stocks on SoFi Invest, wherein the companies are measured by the number of accounts that invest in that stock. SoFi Social 50 ETF has amassed $24.6 million in its asset base and charges 29 bps in annual fees. It trades in an average daily volume of 7,000 shares.
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